sábado, 19 de maio de 2018

Bitcoin arbitrage in Brazil - how to do it

Brazil has been
a good market for Bitcon/cryptocurrency arbitrage. Although the last weeks have
been rough, prices spikes always occur and specialists have pointed out to me
that, if one can keep costs down, it is possible to set up a stable and
recurring arbitration business.

The
restrictions faced by entrepreneurs are more due to bureaucracy and business culture
than to legal regulation. Brazilian law is relatively welcoming of bitcoins and
other cryptocoins.

In this article
I will explain both the theory and the practice behind it.

Note: I`m using
Bitcons as the general term for cryptocurrencies.

1. LEGAL FRAMEWORK OF BITCON ARBITRATION IN BRAZIL

Bitcoins did
not receive a specific legal classification in Brazil, as of yet. So far, they
are subsumed under the general class of “intangible goods”, but without any
special designation such as software, services, intellectual property, etc.

This turns out
to be very consequential. The broad definition prevents bitcoin from being taxed
as a license subject to royalties, or as an off-the-shelf software code.

In a sense,
cryptocurrencies are similar to shares or financial options. Intangible
property that is worth money, but that is not subject to import tax or other
customs duties.

This mean that
they can be openly called bitcoins in legal documents, which is a plus. Several
other countries require traders to conceal the nature of the operation by calling
bitcoins “software”, “special services”, “special customers points in a promotion
system” and all sorts of understated or generalized terms.

Keeping this line
of reasoning, a hypothetical purchase of bitcoins abroad, made by a Brazilian
company, would play out like this:

The Brazilian
company would make an international transference of funds to the seller. This
purchase is not taxed in itself, however the FX transaction is taxed at 0,38 by
the tax over financial operations (IOF);

Bitcoins are
transferred to the buyer`s wallet;

Bitcoins are sold
inside of Brazil. This sale will be taxed according to the company`s tax regime
in Brazil and will probably be considered a “Non-operational” gain, taxed at 34%.

Profits of the
operation can be used to purchase more bitcoins.

However simple,
this operation is rarely performed, due to the problems listed next.

2. PRACTICAL PROBLEMS

The first problem
is that few banks are bitcoin friendly, specially among the big retail banks.
The situation in Brazil is not as bad as in other countries, though, because
middle banks specialized in FX transactions are more willing to engage in operations
involving bitcoins.

A second obstacle
is that the local sale of bitcoins does not generate a formal invoice for tax
purposes (nota fiscal). This tends to put the company in a tough spot when it is
required to prove the origin of its profits to the bank compliance officers. A
solution for this will be discussed in the next section.

The business
practices of bitcoin exchanges also present a challenge. Exchanges in the US or
Europe don`t generally accept deposits made directly by a foreign entity
located in South America. It is not uncommon for an exchange to only accept deposits
made from a bank based in the same country as the exchange.

Finally, the processing
time. Sending money abroad through banks or exchange houses is not a continuous
process. From time to time the compliance procedures will eat up a couple days.
Moreover, retail banks will seldom perform transactions in the same day. D+2 is
likely the standard. If the operation is not correctly timed, a week can go by
before the funds reach the other party.

3. A STRUCTURE THAT WORKS

After
meditating on this problem and after discussions with a good number of banks and
compliance officers I conceived a model that is compatible with Brazilian
regulations and that is agile enough to work according to the timing of the
arbitrage business.

1. First step is
to incorporate a Brazilian company, owned by a foreign company that is engaged
in the purchase of bitcoins.

2. The owners of
the Brazilian company must inject funds in the Brazilian entity through increase
or pay-up of equity (loans can be used, but are not recommended in this case)

The funds available to the company should be enough to purchase bitcoins
abroad in large scale.

The controlling
company, based abroad, will purchase bitcoins in local exchanges.

3. The
controlling company must perform a direct sale (over the counter sale) to the Brazilian
subsidiary

This is extremely important. Bitcoins cannot
be transferred directly to the Brazilian subsidiary, without a proper purchase
and sale agreement. The price described in the contract should be somewhat of
an “arm’s length” price. Brazil does have transfer pricing rules and will not
accept a direct transference of assets from the controlling company, unless
this transference is backed by commercial reasons.

On the bright
side, Brazilian transfer pricing regulations are not detailed when it come to
financial products or intangibles. This means that the controlling company can
opt to sell the bitcoins with the slightest overprice.

The sale
contract should be precise when describing the term of payment. Terms of up to
30 days wold be considered normal and give enough time for the Brazilian entity
to resell the assets in the Brazilian market, hopefully for a profit.

4. T

he
Brazilian entity will receive the bitcoins in it wallet and will sell them in
Brazil.

The sale
can be performed directly to individual or through an exchange. If a sale is made
directly to a buyer, a full purchase and sale agreement should be executed. In case
the sale is performed through an exchange, the company must be very meticulous
in detailing which exchange was used and, if possible, the company should try
to obtain info on who the buyer is. The more detailed the records, the easier
it will be to complete the next step of the process.

5. Remittance
of the payment to the controlling company, through an exchange agreement.

When
performing the payment, the Brazilian company should be able to point out the
origin of the funds. That is, it should demonstrate financial books and, if
possible, executed agreements with buyer/ or a log of transactions performed in
an exchange. Good records will allow the exchange to be processed quickly, maybe
in the same day.

4. EVOLUTION OF THIS MODEL

This template
is very simplified. A realistic model should take into account the exchange
rate variation and other details.

This model can
be also expanded to a more financial profile. For example, the foreign investor can make the Brazilian company
overfunded, through loans or other means, so that it will be able to purchase
several batches and only have to perform a FX transaction once every 60 days.
This may allow the group to take advantage of variation in the USD/BRL rate.

Please feel free
to get in touch if you need recommendations for bitcoin friendly banks, or if
you would like to explore this model in more detail.

7 comentários:

Hello Everybody,My name is Mrs Sharon Sim. I live in Singapore and i am a happy woman today? and i told my self that any lender that rescue my family from our poor situation, i will refer any person that is looking for loan to him, he gave me happiness to me and my family, i was in need of a loan of S$250,000.00 to start my life all over as i am a single mother with 3 kids I met this honest and GOD fearing man loan lender that help me with a loan of S$250,000.00 SG. Dollar, he is a GOD fearing man, if you are in need of loan and you will pay back the loan please contact him tell him that is Mrs Sharon, that refer you to him. contact Dr Purva Pius,via email:(urgentloan22@gmail.com) Thank you.

Hello my name is Lauren i'm from USA i want to testify of a great and powerful spell caster my husband left me and the kids for 2 weeks when i called him he didn't pick up when he came back home the 3rd week he told me he wanted a divorce i was so sad i cried all night he left again i was so lonely the next day i was searching for something online when i found a spell caster called Priest Ade who have helped so many people with their problems so i contacted him with my problems he told me it will take 24hrs and my husband will be back to me i did every thing he told me to do and the next day my husband came back kneeling and begging he canceled the divorce we are now happy together Priest Ade can help you too Email him at

POWERFUL SPELL CASTER THAT BROUGHT MY EX HUSBAND BACK INTO MY LIFE AFTER HE LEFT ME EMAIL HIM VIA EMAIL INFINITYLOVESPELL@GMAIL.COM OR INFINITYLOVESPELL@YAHOO.COM ADD HIM ON WHATSAPP +2348118829899

Hello my fellow friends online I'm Diana Gilbert from USA, I want to use this medium to thank Dr Great because he brought back my Ex husband. my husband left me for his ex girlfriend he had before he married me it's a difficult situation for me I called and beg him to come back he refused he said he don't love me anymore I tried every possible way to get him back all was in vain I told my friend about it and she gave me Dr Great email and I emailed him and told him my problem and he told me what to do and I did it and he cast a love spell which brought back my husband within 24 hours. If you need help in getting back together with your Ex, email Dr Great at infinitylovespell@gmail.com or infinitylovespell@yahoo.com WhatsApp him +2348118829899

POWERFUL SPELL CASTER THAT BROUGHT MY EX HUSBAND BACK INTO MY LIFE AFTER HE LEFT ME EMAIL HIM VIA EMAIL INFINITYLOVESPELL@GMAIL.COM OR INFINITYLOVESPELL@YAHOO.COM ADD HIM ON WHATSAPP +2348118829899

Hello my fellow friends online I'm Diana Gilbert from USA, I want to use this medium to thank Dr Great because he brought back my Ex husband. my husband left me for his ex girlfriend he had before he married me it's a difficult situation for me I called and beg him to come back he refused he said he don't love me anymore I tried every possible way to get him back all was in vain I told my friend about it and she gave me Dr Great email and I emailed him and told him my problem and he told me what to do and I did it and he cast a love spell which brought back my husband within 24 hours. If you need help in getting back together with your Ex, email Dr Great at infinitylovespell@gmail.com or infinitylovespell@yahoo.com WhatsApp him +2348118829899

What a wonderful and a straight forward spell caster that has brought back joy and happiness into my life Am giving this testimony because am so happy, I want to thank Dr. ojoka for the great thing He has done in my life , He brought happiness back to my life, I never believed in spell casters until my life fell apart when my lover of 6 years decided to call it quit almost when we wanted to get married. I was so emotional breakdown to the extent i could not do anything reasonable again, after 2months in pain before an old friend of mine introduced me to a spell caster on line called Dr ojoka, this was after I have been scammed by various fake spell casters. I was introduced to Dr ojoka a true Spell Caster. In less than 38 hours i saw wonders, my lover came back to me and my life got back just like a completed puzzle, and after 1month later we got married and it was just like a dream to me because i thought i had lost him forever. Thank you Dr. ojoka for helping me but most of all, Your Honesty and Fast Accurate Results. EMAIL HIM FOR HELP: dr.ojokaspelltemple@gmail.com or : through his number +2348144172934ARE THE THINGS DR OJOKA CAN THESEALSO CURE.. GONORRHEA, HIV/AIDS , LOW SPERM COUNT, MENOPAUSE DISEASE, PREGNANCY PROBLEM, SHORT SIGHTEDNESS PROBLEM, Stroke, Bring back ex lover or wife/husband..

POWERFUL SPELL CASTER THAT BROUGHT MY EX HUSBAND BACK INTO MY LIFE AFTER HE LEFT ME EMAIL HIM VIA EMAIL INFINITYLOVESPELL@GMAIL.COM OR INFINITYLOVESPELL@YAHOO.COM ADD HIM ON WHATSAPP +2348118829899

Hello my fellow friends online I'm Diana Gilbert from USA, I want to use this medium to thank Dr Great because he brought back my Ex husband. my husband left me for his ex girlfriend he had before he married me it's a difficult situation for me I called and beg him to come back he refused he said he don't love me anymore I tried every possible way to get him back all was in vain I told my friend about it and she gave me Dr Great email and I emailed him and told him my problem and he told me what to do and I did it and he cast a love spell which brought back my husband within 24 hours. If you need help in getting back together with your Ex, email Dr Great at infinitylovespell@gmail.com or infinitylovespell@yahoo.com WhatsApp him +2348118829899

I was diagnosed 2 years ago at age 63. Symptoms were tremor in right leg, loss of handwriting ability, and soft voice. I also have difficulty rising from a seated position and have balance issues. I started out taking only Azilect, then Mirapex, and 6 months ago Sinemet. Several months ago I started falling frequently, hence the reason for Sinemet. I tried every shots available but nothing worked. In June 2018, my neurologist and I decided to go with natural treatment and was introduced to Natural Herbal Gardens natural organic Parkinson’s Herbal formula, i had a total decline of symptoms with this treatment, the Tremor, falling frequently, stiffness, body weakness, balance issues, depression and others has subsided. Visit Natural Herbal Gardens official email: greatogudugu@gmail.com . This treatment is a breakthrough for all suffering from Parkinson’s, don’t give up Hope. Keep Sharing the Awareness, herbs are truly gift from God.

What a wonderful and a straight forward spell caster that has brought back joy and happiness into my life Am giving this testimony because am so happy, I want to thank Dr. ojoka for the great thing He has done in my life , He brought happiness back to my life, I never believed in spell casters until my life fell apart when my lover of 6 years decided to call it quit almost when we wanted to get married. I was so emotional breakdown to the extent i could not do anything reasonable again, after 2months in pain before an old friend of mine introduced me to a spell caster on line called Dr ojoka, this was after I have been scammed by various fake spell casters. I was introduced to Dr ojoka a true Spell Caster. In less than 38 hours i saw wonders, my lover came back to me and my life got back just like a completed puzzle, and after 1month later we got married and it was just like a dream to me because i thought i had lost him forever. Thank you Dr. ojoka for helping me but most of all, Your Honesty and Fast Accurate Results. EMAIL HIM FOR HELP: dr.ojokaspelltemple@gmail.com or : through his number +2348144172934ARE THE THINGS DR OJOKA CAN THESEALSO CURE.. GONORRHEA, HIV/AIDS , LOW SPERM COUNT, MENOPAUSE DISEASE, PREGNANCY PROBLEM, SHORT SIGHTEDNESS PROBLEM, Stroke, Bring back ex lover or wife/husband..

ABOUT ME

My name is Adler Martins. I`m a Brazilian lawyer specialized in international trade, with over 15 years of experience. I represent foreign companies investing in Brazil and assist them with very practical advice in taxation, contracts and compliance matters.

I can write and speak English fluently and have developed deep knowledge in adapting concepts and terms of Common Law to the Brazilian legal frame. I have earned praise as an efficient negotiator of international contracts and facilitator of multi-party deals.

I have represented foreign companies in multi-million dollar transactions, including formation of Joint Ventures with Brazilian companies, purchase of mining and forest assets in Brazil and sales to the Brazilian government.

I`m a pioneer in the study of contract law applicable to agreements between Brazil and other BRIC countries.

I have a solid background in international taxation, and use it to assist cross-border transactions such as loans, IP licensing, offshore triangulation and import-export operations.I often work with start-up companies and have been working a lot with Bitcoin Arbitration.